Some vacation homes, cabins, or cottages in Michigan have remained owned by different generations of families for years. The concern for passing these homes down from one generation to the next historically was with the “uncapping” of residential property values, which often led to property taxes on these homes doubling or even tripling from the taxes that the past generation had paid on the home. The Michigan legislature, however, stepped in to remedy these concern several years ago by passing a law that provided relief to heirs for property taxes owed on vacation homes.
Michigan law now provides that parents may leave vacation homes to designated relatives through a will or trust without any change to the existing property taxes, so long as the homes remain used for residential rather than commercial purposes. The relatives eligible for relief from this law include spouses, parents, siblings, children, and grandchildren. This is a huge boon for heirs who inherit the family vacation home and an incentive to continue to keep the property within the family.
Once siblings inherit a vacation home, however, what are their next steps? One option for siblings who get along and plan on actually using the home is simply to maintain the property jointly titled in their names. This only works, however, if siblings can work together to pay to maintain the property and make capital improvements as needed.
For siblings who historically don’t get along or have trouble agreeing on issues related to the home, the situation is much more difficult. It also compounds the situation when one sibling wants to keep the property for his or her family’s usage, but the other sibling has no interest in the property at all. There is no one-size-fits-all solution to this situation. The siblings may agree to sell the property and split the proceeds, thus freeing both from the costs of maintenance and improvements. If one sibling is insistent on keeping the property, then that sibling could effectively buy out the other sibling’s share by getting an appraisal of the property and paying the other sibling his or her share of the equity. These are probably the two most common options for siblings in this situation.
Regardless of the objective that you have in mind for your estate plan, you need an attorney who can provide you the help necessary to create an estate plan that is right for you and your family. Taking this step will alleviate problems with your assets in the future, which can be costly, time-consuming, and complex. At Legacy Law Center, our Ann Arbor elder law attorneys can help you through any situations that may arise as you work through the estate planning process.
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